Selling Options on Futures? - Options on Futures | futures io social day trading
futures io futures trading


Selling Options on Futures?
Updated: Views / Replies:692,923 / 6,325
Created: by ron99 Attachments:735

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 735  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #2851 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: ES, NQ, CL, /6E futures options.
 
Posts: 270 since Oct 2012
Thanks: 126 given, 75 received

TOS margin

As far as I can tell, it is more than span margin, but not unreasonable. It is definitely much less than IB margin.

As an example yesterday:

Sold NQ 2960 puts @ 2.4 (20 multiplier) - Expire 02/22/14. Initial Margin (TOS)=305 per contract.

Today the TOS margin live is 336.

Reply With Quote
The following user says Thank You to datahogg for this post:
 
  #2852 (permalink)
Elite Member
London + Great Britain
 
Futures Experience: Master
Platform: Interactive Brokers, OptionsXpress, TradeMonster, RJO, AmiBroker, Wealthlab
Favorite Futures: Futures, Options, Equities
 
Physicsman's Avatar
 
Posts: 19 since May 2013
Thanks: 85 given, 23 received

Jan Ag. Reports

Are you fellows monitoring the major grain markets today to see if an opportunity arises after the release of the Jan WASDE and other grain reports?? In 5 of the last 6 years one of the 3 (Soybeans, Wheat, Corn) has gone limit up/down. The volatility should help juice up the premium.

I've got my eye on them ready for the report release!

Reply With Quote
 
  #2853 (permalink)
Trading Apprentice
Chicago
 
Futures Experience: Advanced
Platform: Ninja, TradeNavigator
Favorite Futures: Futures
 
Posts: 7 since Jan 2014
Thanks: 0 given, 1 received


Selling options is certainly a valid trading methodology. Just make sure that you have the same type of risk management procedures in place as you would an outright Futures position. I saw many a floor trader get complacent and loose a years’ worth of income on a volatility spike. Several blew out altogether (some on more than one occasion).

Reply With Quote
 
  #2854 (permalink)
Trading Apprentice
Singapore
 
Futures Experience: Intermediate
Platform: Rtrader,Zaner 360
Broker/Data: Deep Discount Trading/Rithmic,DeCarley/Gain
Favorite Futures: Future Options
 
Posts: 35 since Sep 2012
Thanks: 46 given, 49 received


kevinkdog View Post
Thanks for the info. I'm still short Feb 6 calls, and Jan 5.5 calls.

From purely a ROI standpoint, right now NG calls and Live Cattle puts are the best things to be in. I see a dozen options at 8% ROI or higher.

KKD, I know this was a while back, but just wanted to say thanks for the heads up on the LC puts, I sold a bunch of Feb 127 Puts on the 19th after investigating your observation, bought them back yesterday for next to nothing, wish they were all that one way, thanks again.

Reply With Quote
 
  #2855 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,361 since Jul 2012
Thanks: 1,110 given, 4,284 received
Forum Reputation: Legendary


Harvard16 View Post
KKD, I know this was a while back, but just wanted to say thanks for the heads up on the LC puts, I sold a bunch of Feb 127 Puts on the 19th after investigating your observation, bought them back yesterday for next to nothing, wish they were all that one way, thanks again.

Thank you, and thanks to @ron99 for turning us all on to this method!

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
The following user says Thank You to kevinkdog for this post:
 
  #2856 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,700 since Jul 2011
Thanks: 781 given, 4,719 received
Forum Reputation: Legendary


kevinkdog View Post
Thank you, and thanks to @ron99 for turning us all on to this method!

kevin you might want to explain the method and what we found out.

Reply With Quote
 
  #2857 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,361 since Jul 2012
Thanks: 1,110 given, 4,284 received
Forum Reputation: Legendary


ron99 View Post
kevin you might want to explain the method and what we found out.

I was actually thanking @ron99 for the whole deep out of money selling option experience in general.

Ron also tipped me off to exiting positions early - before expiration. It is also discussed somewhere early in the thread.

I'm still analyzing this, and results may be different for your situation, but in general it looks like you can really boost your ROI (by factor of 2+) by exiting positions early, and not waiting until expiration.

This assumes that you have more trades waiting in the wings for you to enter. Otherwise it is better to hold to expiration.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
The following 2 users say Thank You to kevinkdog for this post:
 
  #2858 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,700 since Jul 2011
Thanks: 781 given, 4,719 received
Forum Reputation: Legendary

Here is one example of early exit.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


This chart uses $5 per half turn for costs.

The Feb CL 70 put if you entered on 10/31 and got out as soon as the price hit bottom or 0.01 using beginning IM X3 had a monthly ROI of 10.4%. It is only 3.9% if you ride to expiration and not pay fees to exit.

For the Mar 70 the monthly ROI when it hit 0.01 was 6.7% vs 3.6%.

Of course the speed in time at which the option gets to lowest price affects the ROI.

And we need to do further study on this.

I needed to have studied it further when others said they were doing it earlier in the thread. My mistake.


Last edited by ron99; January 11th, 2014 at 01:17 PM.
Reply With Quote
The following 6 users say Thank You to ron99 for this post:
 
  #2859 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,361 since Jul 2012
Thanks: 1,110 given, 4,284 received
Forum Reputation: Legendary

Graphical Example

Here an example trade, in graphic form.

Ratio = ROI if you exited early on the DTE date shown / original ROI = if ratio > 1, that means your ROI is better than you initially thought!

You sell the option at 23 Days To Expiration (DTE).You calculate your ROI to be X%. FAR LEFT OF CHART.

If you hold it to expiration (DTE=0), you will get X% ROI (ratio=1). FAR RIGHT OF CHART

If you buy it back one day after you sell it, the price likely hasn't changed, and you'll pay fees to close it out. So your ROI is now less than 0 (ratio <0), meaning you lose money. LEFT OF CHART.

As the days to expiration go towards zero, moving from left to right on the chart, your ROI changes every day. At one point, you hit a peak. That is the ideal time to sell. Problem is you do not know the peak until after the trade is done.

Near expiration, exiting early might actually hurt you (Ratio<1).


Hopefully this explains it a bit. If not, please ask questions.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Reply With Quote
The following 5 users say Thank You to kevinkdog for this post:
 
  #2860 (permalink)
Elite Member
London/UK
 
Futures Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker/Data: IB / IQfeed
Favorite Futures: Bund
 
Posts: 438 since Sep 2012
Thanks: 260 given, 96 received



kevinkdog View Post
Problem is you do not know the peak until after the trade is done.

A lot of the equity monthly option strategies (40-60 DTE) I have seen use a fixed % of total return if left to expiry ie most were 10-15% of total poss profit and if this wasnt hit in the first few weeks then it was closed out regardless to free up capital for other trades.

All trading though has the 'what if/hindsight' (not knowing) issue, smthg everyone has to deal with whether by having strict rules/discipline, automation or whatever works for them...

Reply With Quote

Reply



futures io > > > > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

Monte Carlo Analysis w/Kevin Davey

Elite only
 

How-to Choose a Futures Broker w/Lynette Lim @ Phillip Capital

Sep 20
 

Alternative Views on Traditional Tools w/Rhonda Jones

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 11:00 AM
Recommend futures, options Broker? sam1197 Reviews of Brokers and Data Feeds 17 March 27th, 2013 12:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 04:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 12:40 PM
Zen-Fire Futures options tici88 Reviews of Brokers and Data Feeds 1 July 30th, 2011 09:16 AM


All times are GMT -4. The time now is 09:40 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-09-19 in 0.08 seconds with 19 queries on phoenix via your IP 54.225.41.203